Briefing: Reeves treads water following Autumn Budget, cranking tax in response ‘to events out of her control’

The 1957 poem Not waving but drowning, by Stevie Smith, describes desperate motion mistaken for cheer. On the basis of Wednesday’s (26 November 2025) Autumn Budget performance, chancellor of the exchequer Rachel Reeves was not drowning – but she was treading water, with ominously less clearance than hoped for.

Budgets are large, portmanteau events which are difficult to judge when they land – details always emerge in the days after.

Bizarrely though, the chaotic run up to this particular Budget probably helped. The disaster narrative was hyped so high and expectations were so low that the reality felt rather underwhelming. In light of this, the questions about the chancellor’s judgement will not have gone – this Budget process has been very poorly managed. But any concerns might temporarily have been put aside.

For me, the most interesting measure in an otherwise unreconstructed exercise was probably the electric cars mileage duty – a pay-per-mile levy on electric cars. This is a real innovation and sounds complicated. However, if it works, Reeves will have essentially introduced soft road charging into the UK as it moves away from combustion engine cars.

For business, there was relatively little of note in 2025’s Budget.

Primarily, measures included a restriction of salary sacrifice on pensions, a further increase in the national living wage and a tightening of the capital allowances regime – all of which provoked wintry responses from business groups. But by the standards of last year, business was spared.

A taxing time

But neither of these noted areas was where the action was. In essence, this year’s Budget was a pretty straightforward and old fashioned exercise in taking from many working people and giving to many other working and non-working people.

Reeves had two critical audiences yesterday – the bond markets and Labour backbenchers.

Markets were volatile on the day, with yields rising early and later falling after the statement, suggesting cautious acceptance. And early briefings suggest that Reeves has staved off immediate challenges to her position from members of Parliament (MPs).

However, an emotional response of relief that things were not worse obscures the fact that the chancellor was doing no more than reacting to events out of her control.

The Budget scorecard shows huge amounts of tax being collected – £29bn in 2030, with overall tax take hitting 38% of gross domestic product (GDP). But this was offset by even larger spending – debt is forecast to be 1% higher in 2030 than now, from 95% of GDP to 96% – mostly driven by welfare concessions to Labour backbenches.

The first line of the Budget document said that the “Budget takes the fair and necessary choices to deliver on the government’s promise of change”.

Labour is going to need to explain how it is “fair” that increasing numbers of working people on moderate incomes are dragged into higher rates of tax through freezing income tax bands – raising nearly £13bn in 2030 – while the government seemingly does nothing to ensure that money is spent efficiently.

Reeves did not drown on Wednesday and, in that respect, exceeded some of the worst expectations.

But my suspicion is that in taxing hugely and spending it on areas which arguably are of more interest to the Labour party than the public at large, the chancellor has stored up trouble down the line.